Nicole Bagley, a Donor, Trustee, and Investor, makes her first Impact Investing into Technology Company Silvernest
Nicole Bagley is an entrepreneur and the trustee of three family foundations. Her first impact investment followed her participation in CO Impact Days and Initiative where she learned about potential investment opportunities and how to make direct impact investments into social ventures. “What’s different about the Impact Finance Center and CO Impact Days and Initiative,” says Nicole, “is that instead of managing money, they are a non profit academic center supported by donors and foundations. IFC works to help others participate in impact investments without the conflict of interests of trying to sell you a service or product.”
Her first direct investment was into Silvernest - a woman founded and led, Colorado-based social venture serving the growing aging population. Silvernest successfully leveraged impact investing to scale its business.
Silvernest offers a unique, affordable solution designed to help address the growing housing needs and concerns for the aging generation. Successful roommate matches help yield income for the homeowner, affordability for the housemate, and economic efficiency for both parties as well as companionship and connectivity which contribute to longevity. Silvernest addresses this need by seamlessly matching and connecting individuals who want to share a home via its safe and secure online platform and unique compatibility matching service.
Co-founders Wendi Burkhardt and Chuck and Debra McKenney bootstrapped the launch of Silvernest in 2015, with a combined personal investment of $200,000. They then sought additional seed capital to further validate the proof of concept in the Denver Metro Area and to refine the user experience and marketing tactics to ensure the ability to seamlessly scale into their next eight target markets.
When Silvernest attended CO Impact Days in March 2016, the team was working to secure $200,000 to close out an initial financing round of $300,000. The first $100,000 had already been secured employing a Convertible Note. As a result of participating in CO impact Days 2016, with additional assistance from the Impact Finance Center, Silvernest attracted six impact investors who invested a total $155,000 of a total raise of $1.3 million since then.
This funding empowered Silvernest to serve communities across Colorado, as well as the major metro areas of Los Angeles, San Diego, Miami, Tampa, and Phoenix. The next phase of expansion will include San Francisco, Seattle, East Lansing, Boston, and Santa Clara Valley.
The venture is now generating enough revenue from its homeowner memberships and background screenings that the goal of offsetting expenses for customer acquisition and direct costs is within reach. But it still requires new sources of funding for product enhancements as well as brand, market and service expansion.
This year, at CO impact Days, both Nicole and the Silvernest team will be back – again seeking investments and investment dollars, but also as veterans of impact investing. They will lead discussions on their experiences through the uniquely aligned connections they made through CO Impact Days.
Learn more about Silvernest at www.silvernest.com.
The Denver Foundation, A Community Foundation, makes an impact investment into Prodigy Ventures
While community foundations have had the ability to make direct investments into social ventures (e.g. projects, nonprofits, for profits, and funds) that support the mission of the foundation since 1969 (with both their unrestricted endowment dollars and their hundreds of donor advised fund dollars), Colorado’s 18 community foundations are still just starting to use this tool. In the last few years, Rose Community Foundation, Community First Foundation, Telluride Foundation, and The Denver Foundation are four of Colorado’s community foundations that have been making direct impact investments. Last year, The Denver Foundation invested in Prodigy Coffeehouse. Prodigy Coffeehouse is not your average neighborhood café. It’s located in a Northeast Denver neighborhood often neglected by similar businesses and where the unemployment rate is high. As important, Prodigy is a nonprofit venture whose baristas come from the neighborhood’s vulnerable youth population to learn job skills while earning a wage.
Since opening its doors in July 2016, 47 low-income, disadvantaged youth age 18-24 have gone through its pre-apprenticeship program, and Prodigy has trained and hired 15 young people as full-service baristas. Today, not only can you purchase a perfectly poured latte, but the apprentice baristas can host your after-hour events for up to 100 people as well.
One more difference? If you take a look at Prodigy’s funding model, you find a unique mix of traditional grants and impact investments in the form of loans with the expectation of financial return.
It took founders Steph and Hillary Frances about a year and a half to raise enough funding to open Prodigy Coffee. As youth development experts, not experienced business owners, they started with foundation grants. That’s when The Denver Foundation opened a new door through impact investing.
The Denver Foundation’s Impact Investment Fund uses low-interest loans and investments, rather than grants, to advance the Foundation’s mission. Other recent investments by the Fund include: 1) the Rocky Mountain Microfinance Institute, a nonprofit that provides learning, lending, and coaching to grow Community Entrepreneurs, and 2) Community Enterprise Development Services (CEDS), which helps immigrant and refugee families in Aurora start and grow businesses.
Impressed with the Prodigy team and concept, the Foundation offered the startup a funding package that combined an initial $20K grant through its Economic Opportunity Community Grant Program, which was re-upped in 2017 for $25k based on the coffee shop’s strong financial and social performance; and a $25K loan at 3 percent interest for 5 years, with interest only for the first two years.
In addition, members of The Denver Foundation’s Impact Investment Committee provided guidance in creating a business model that would work. Without The Denver Foundation’s creative approach to mixing grant and investment funding, Prodigy would not have opened when it did, depriving its youth apprentices of training and income and the community around its location at 40th and Colorado of a top-notch coffee shop.
A year later, named “Best New Coffee Shop” by Westword, Prodigy and its team of apprentice baristas are thriving in a world where only about one-fifth of service businesses survive their first year. In fact, in its first six months, Prodigy earned enough revenue to cover almost 75% of its operating costs.
Visit Prodigy Coffee at http://www.prodigyventures.org for a lovely cup of coffee, to support Denver’s youth, or to put on your next event. And learn more about The Denver Foundation’s Impact Investing Fund at http://www.denverfoundation.org/Community/Impact-Investing.
Closed Loop Ventures, an Impact Investing Fund, Makes an Impact Investment into Rebound Technologies
What do Walmart, Coca-Cola, Unilever, Johnson & Johnson, Procter & Gamble, PepsiCO, Keurig, Goldman Sachs, have to do with impact investing and climate mitigation? These Fortune 100 and 500 firms recently invested in the Closed Loop Fund (either through their corporate foundation using a Program Related Investment (PRI) or treasury) in order to create a low-cost debt fund for municipalities to borrow to upgrade their recycling infrastructure. Such investments reduce waste, create new resources, save energy, and build brand.
After successfully launching the Closed Loop Fund, Closed Loop Partners launched Closed Loop Ventures (CLV). CLV is an early-stage equity investment fund focused on sustainable consumer goods, advanced recycling technologies and services that further the circular economy.
According to Project Drawdown, a climate change mitigation initiative, improving refrigeration management and reducing food waste are the number one and number three most substantive solutions to global warming, respectively. That’s one reason that Closed Loop Ventures (CLV) considered an equity investment in Denver-based Rebound Technologies an exciting and lucrative opportunity. Its team saw Rebound as ideal for one of its early impact investments – catalyzing a significant climate change mitigation impact and reducing food waste while simultaneously delivering a high potential for impressive financial return.
CLV was able to validate the supply chain opportunity and impact with its unique network of food and retail companies. “Rebound Technologies directly addresses a huge driver of waste in the food supply chain—inefficiencies in the freezing process between the farm and the retailer,” says Rob Kaplan, CLV managing director. “Based on our work with retailers and consumer product companies, we believe there is a strong demand for this technology.”
Founded in 2012, Rebound’s IcePoint technology is a liquid sub-cooling product plugs into existing industrial freezer systems and provides the control to deploy bursts of high capacity cooling, ideal for speeding up blast freezing services and mitigating peak energy expenses. No other cooling technology offers this control and Rebound accomplishes it with a 40 percent efficiency gain. Facilities not only realize a boost in revenue from increased product throughput, but they also benefit from decreased energy expenses while helping support food waste diversion.
Rebound has partnered with Lineage Logistics, one of the largest cold storage and logistics companies in the United States, to pilot IcePoint. Shipping out in November, this commercial pilot is a critical step towards optimizing IcePoint for industrial applications, a process that can lead to $275K in increased earnings per unit for Lineage along with over 2,200 tons of potential food waste diverted.
The equity investment made by CLV adds to a mix of support that also includes government grant funding from the National Science Foundation, USAID, the Department of Energy, among others. By diversifying its source of funding to include impact investments, Rebound was able to raise enough to complete research and development, pilot its product with paying customers, building its brand and creating a strong foundation from which to scale globally.
Through additional investments like Rebound, Closed Loop Ventures and its parent investment firm anticipate helping to: eliminate 40 million tons of greenhouse gases, improve recycling for more than 18 million households, divert more than 20 million cumulative tons of waste from landfills, and save nearly $60 million for US cities.
To learn more about Rebound, go to http://rebound-tech.com. Or explore the Closed Loop Ventures portfolio of impact investments at http://www.closedlooppartners.com/closed-loop-ventures/.
Kenneth King Foundation, a Private Foundation, Invests in Colorado Lending Source
From 2000-2010 less than 500 of the 76,000 private foundations in the U.S. have used one of the most unique tools in their toolbox: a program related investment (PRI). PRI’s allow foundations to make a gift, grant, or loan to a for-profit entity or fund if that entity and gift furthers the charitable mission of the foundation. Of the small but growing list in Colorado, Kenneth King Foundation, a Denver-based private foundation, led by Janice Fritsch, joins the Colorado Health Foundation, Piton Foundation & Gary Community Investments, and the Colorado Trust in leading the way using PRIs to leverage foundation resources.
For Kenneth King Foundation - focused on “Improving Lives with Access to Meaningful Employment, Entrepreneurism, Education and Basic Human Services -PRIs can diversify the tools leveraged, and increase the funds available, to create good jobs in Colorado by encouraging innovation and entrepreneurship.
The Foundation found that a PRI was the ideal funding tool support the nonprofit Colorado Lending Source, which launched its Main Street “Character” Loans in 2012, to address the fact that many potential entrepreneurs – especially Millennials, women, and immigrants – cannot get a traditional loan due to their credit scores. Instead, Main Street loans are awarded based on character – a mix of stability, focus, and passion that you can see in a potential investee when you meet them.
It’s old-school banking, and it’s working with a low 3% default rate over 70 loans since the organization’s inception. Main Street Loans typically range from $5,000 to $50,000.
That’s why the Kenneth King Foundation was willing to take a chance by investing $100,000 to fuel three Main Street “Character”oans at an average of $30,000 to promising start-ups last year. Kenneth King President Janice Fritsch approached Colorado Lending Source after learning of its sponsorship of Trout Tank, Denver’s entrepreneurial pitch accelerator. The Foundation was seeking opportunities to prove its own impact investing model.
Loans generated by Kenneth King support went to: 1) Seed Social & Creative: a Millennial to help launch a social media business; 2) Sweet Sweetz Ice Cream & Deserts: two sisters opening an ice cream shop between schools in their underserved neighborhood: and 3) CG Habitats: an outdoor clothing company whose credit score had suffered during the recession but whose products are selling on a national scale.
Executive Director Mike O’Donnell has spent years supporting small businesses and generating competition. But equally important, he says, is that the Main Street “Character” Loans identify people who are passionate about their work, happy in what they do – and that makes for a more vibrant community.
With much of the financial lending and education that Colorado Lending Source does already sustainable, he and his team are now looking for new funding for the next round of Main Street “Character” Loans.
Colorado Lending Source is a nonprofit dedicated to helping inspired people create thriving businesses with funding, education and resources. Learn more at www.coloradolendingsource.org.